As long as we're touching sacred cows--I refer to the previous post on the gas tax--let's talk about tolling on interstate highways. Is it time to revisit this question?

The era of the massive federal public works project is over. Gone are the days when it is politically feasible to propose $12 billion for a 41,000-mile interstate highway system, as President Dwight Eisenhower did in 1956. And yet it will cost $2 trillion to $3 trillion to reconstruct the current interstate highway system to today's design and safety standards, so says Reason Foundation Transportation Policy Director Robert Poole, a contributor to this blog.

Current law only allows states to toll new lanes on interstates. That makes no sense if the government isn't going to pony up the maintenance funds, says International Bridge, Tunnel and Turnpike Association CEO Pat Jones, also a contributor to this blog. "The federal government right now is an obstacle to that. If you're not going to solve the problem then get out of the way," he told me.

The argument against interstate tolling is best summed up by former House Transportation and Infrastructure Chairman James Oberstar, D-Minn., who told a colleague in 2007, "They're taking existing capacity, built with federal highway trust funds, and charging you twice for it by putting a toll on it." The "public" in highways means it should be available to everyone...for free.

What are the best arguments for allowing tolling on interstate highways, given the current budget and political climate? What are the best arguments for continuing to bar tolling on existing lanes? Are there better ways to finance highway maintenance? Is there a middle ground to be struck on the issue? What could proponents of interstate tolling offer to opponents to make the notion acceptable?

5 Responses

November 29, 2012 1:48 AM

Build on Facts, not Folklore and Fear

I completely agree with Emil Frankel that "the strongest argument for tolling is that federal funding for surface transportation is stagnant, and is likely to remain so for many years. In an era of severely constrained resources for surface transportation, states and metropolitan regions should be afforded greater flexibility to fund and finance their transportation facilities and networks" as they see fit. In other words, if Congress won’t solve the problem, then it should get out of the way.

I won’t go as far as Gabriel Roth in saying that "all roads should be tolled." However, tolling is a tool. And states should have the flexibility to use this powerful tool on any road where it makes the most sense – including on the Interstate highways.

The initial investment by all levels of government to build the interstate highway system was roughly $130 billion. But as Fawn correctly points out, it will cost 10 to 20 times that amount to REBUILD the system over the next 50 years. That huge sum of money is unlikely t...

I completely agree with Emil Frankel that "the strongest argument for tolling is that federal funding for surface transportation is stagnant, and is likely to remain so for many years. In an era of severely constrained resources for surface transportation, states and metropolitan regions should be afforded greater flexibility to fund and finance their transportation facilities and networks" as they see fit. In other words, if Congress won’t solve the problem, then it should get out of the way.

I won’t go as far as Gabriel Roth in saying that "all roads should be tolled." However, tolling is a tool. And states should have the flexibility to use this powerful tool on any road where it makes the most sense – including on the Interstate highways.

The initial investment by all levels of government to build the interstate highway system was roughly $130 billion. But as Fawn correctly points out, it will cost 10 to 20 times that amount to REBUILD the system over the next 50 years. That huge sum of money is unlikely to come from the gas tax or any other tax source. Read the article by Ed Regan and Steven Brown of CDM Smith for further details.

The other strong argument for tolling comes from the Reason Foundation study released this week, "Dispelling the Myths: Toll and Fuel Tax Collection Costs in the 21st Century." This report is a game changer. It obliterates the commonly accepted folklore often cited by the trucking industry that the cost of collecting the fuel tax is only 1% of revenues and the cost of collecting tolls is at least 10 times that amount. That folklore is now dead.

Based on painstaking research, Reason argues that the cost of collecting tolls under a mature all electronic tolling (AET) system is only about 5% of revenues. The study goes on to say that the cost of collection for motor fuel tax revenues is significantly greater than the widely believed figure of 1% of the revenue collected. In fact, when all the evidence is examined, the ACTUAL cost of collection for the gas tax is closer to 5% of revenues.

In summary, tolling is a tool in the toolbox. States should have the flexibility to use this tool and not be hampered by obsolete laws that don’t account for current circumstances. Furthermore, the cost of collecting tolls in a mature AET system is equivalent to the "cheap" cost of collecting the fuel tax.

There is no longer a logical, evidence-based reason to deny states the FLEXIBILITY to use tolls on interstate highways. The only reason that remains is based on inaccurate folklore and fear.

November 23, 2012 10:32 PM

All roads should be tolled!

IBTTA’s Pat Jones, who wants Interstates tolled to finance their maintenance, does not go far enough: All roads should be tolled. This would also help IBTTA members, as now their toll roads have to compete against government-owned “free” roads.

If only main roads were to be tolled, traffic would be encouraged to shift to minor (non-tolled) roads. This would harm both safety and the environment.

The recommendation to toll all roads was made by the National Surface Transportation Infrastructure Financing Commissionin its report published in February 2009 "Paying our Way: A New Framework for Transportation Finance”. It called for

“The transition to a new, more direct user charge system as soon as possible and [a commitment] to deploying a comprehensive system by 2020.”

The Commission did not suggest that such tolls be levied on top of existing fuel taxes, but that they should replace them. In this it echoed the 1956 legislation that established the federal financing of the Interstates by means of taxes on fuel. ...

IBTTA’s Pat Jones, who wants Interstates tolled to finance their maintenance, does not go far enough: All roads should be tolled. This would also help IBTTA members, as now their toll roads have to compete against government-owned “free” roads.

If only main roads were to be tolled, traffic would be encouraged to shift to minor (non-tolled) roads. This would harm both safety and the environment.

The recommendation to toll all roads was made by the National Surface Transportation Infrastructure Financing Commissionin its report published in February 2009 "Paying our Way: A New Framework for Transportation Finance”. It called for

“The transition to a new, more direct user charge system as soon as possible and [a commitment] to deploying a comprehensive system by 2020.”

The Commission did not suggest that such tolls be levied on top of existing fuel taxes, but that they should replace them. In this it echoed the 1956 legislation that established the federal financing of the Interstates by means of taxes on fuel. It called for the abolition of those taxes within three years of the completion of the Interstate Highway System.

Of course, tolling should be done electronically, by systems such as E-ZPass, which do not require vehicles to be stopped for toll payments.

November 21, 2012 2:32 PM

Guest: No Such Thing as a Free Road

This is a guest post from Jim Ely, vice chairman of Toll Services at HNTB Holdings Ltd.

The biggest challenge facing our aging surface transportation system is the lack of an adequate and sustainable funding source. State and federal highway trust funds are running on empty, depleted by inflation, rising maintenance costs and increased fuel economy of vehicles. The truth is: Transportation isn’t free. Tolling is a very real solution to funding and maintaining our roadways.

Related to tolling existing general purpose lanes on the Interstate we should note:

First, no one is advocating tolling every lane at every location. Tolling should be selectively used in those states with a significant repair bill and no other way to pay for it and sufficient traffic to ensure adequate revenue. It is a means to an end. That being, keeping the Interstate operational for future generations to come.

Second, motorists are not paying twice. A road is like a house. After it's built, you have to maintain it to extend its life. We should ...

This is a guest post from Jim Ely, vice chairman of Toll Services at HNTB Holdings Ltd.

The biggest challenge facing our aging surface transportation system is the lack of an adequate and sustainable funding source. State and federal highway trust funds are running on empty, depleted by inflation, rising maintenance costs and increased fuel economy of vehicles. The truth is: Transportation isn’t free. Tolling is a very real solution to funding and maintaining our roadways.

Related to tolling existing general purpose lanes on the Interstate we should note:

First, no one is advocating tolling every lane at every location. Tolling should be selectively used in those states with a significant repair bill and no other way to pay for it and sufficient traffic to ensure adequate revenue. It is a means to an end. That being, keeping the Interstate operational for future generations to come.

Second, motorists are not paying twice. A road is like a house. After it's built, you have to maintain it to extend its life. We should celebrate the success of the Interstate system and shore up funding to keep it usable, safe and secure. It is both a critical mobility and economic component for this nation’s prosperity. We take it for granted and can't imagine the closure of lanes or bridges due to disrepair.
Tolling as a funding tool should be the last resort if other non-federal funds are available.

Once the first state converts a general purpose lane as part of the Pilot Federal Program, the toll option will be seriously considered by others. It is a controversial topic which will affect many stakeholders. Whether we see a pilot program implemented or future tolls on any general purpose lane(s), legislation will be required at the state level.

With a combination of the right place, at the right time, and with the right configuration, tolling is the right thing to do.

November 20, 2012 2:52 PM

Remove Barriers to State Innovation

The strongest argument for tolling is that federal funding for surface transportation is stagnant, and is likely to remain so for many years. Yet, the needs for the restoration and rebuilding of the nation's sytem of highways, bridges, tunnels, and key transit and commuter facilities are growing. To a significant degree, forms of user-based revenues, other than the federal gasoline tax, will have to become the primary sources of investment capital for the renewal of those elements of our transportation system, critically related to national goals of economic growth, national connectivity, and metropolitan access. Tolling of existing, as well as of new, Interstate Highways would provide important investment resources, as well as allow more thoughtful means to influence how and when travellers use the nation's most congested transportation facilities.

In an era of severely constrained resources for surface transportation, states and metropolitan regions should be afforded greater flexibility to fund and finance their transportation facilities and networks. In the absenc...

The strongest argument for tolling is that federal funding for surface transportation is stagnant, and is likely to remain so for many years. Yet, the needs for the restoration and rebuilding of the nation's sytem of highways, bridges, tunnels, and key transit and commuter facilities are growing. To a significant degree, forms of user-based revenues, other than the federal gasoline tax, will have to become the primary sources of investment capital for the renewal of those elements of our transportation system, critically related to national goals of economic growth, national connectivity, and metropolitan access. Tolling of existing, as well as of new, Interstate Highways would provide important investment resources, as well as allow more thoughtful means to influence how and when travellers use the nation's most congested transportation facilities.

In an era of severely constrained resources for surface transportation, states and metropolitan regions should be afforded greater flexibility to fund and finance their transportation facilities and networks. In the absence of Congressional willingness either to increase existing federal motor fuels taxes or to enact new forms of federal mileage-based fees to replace the gasoline tax, Congress should afford states and metropolitan regions with the tools to develop and expand their own revenue sources. To that end, federal barriers to state innovation and flexibility, like the prohibition on tolling of existing Interstate Highways, should be substantially reduced, if not elminated.

Moreover, the ability to establish new user-related revenue streams, like tolling, would greatly enhance the capacity of states and metropolitan regions to leverage additional private capital for investment in major transportation projects through the recently expanded TIFIA program and public-private partnerships (PPPs).

If states and metropolitan regions are going to be asked to do more in transportation, and if more of the funding and investment responsibilities are to devolve on them, it is essential that Congress remove the restrictions on their capacity to innovate. At core, this issue is really one of federalism.

November 19, 2012 12:31 PM

Addressing Transportation Financing

It is apparent that the most appropriate way of addressing transportation financing is the way it has been done successfully for decades and that is a user tax on fuel, ultimately converted into a vehicle mile tax. This truth is more self evident today than ever before given the state of disrepair of our roads and bridges and the need to grow our economy and create jobs. Recognizing the disfunction in our government that makes such an obvious and necessary solution unachievable, tolling on interstates certainly makes sense as long as the proceeds are used for legitimate transportation construction and repair activities. This does not represent dual taxation as the tolls would be used for second generation work to repair or add capacity to the infrastructure built originally. With the reelection of the President, one can only hope that sanity will return to the nation's capital.

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